Monday, December 16, 2013

The Capo di Tutti Capi returns!

Bob Diamond, one of the most controversial
bankers to emerge from the financial crisis, but the man ousted as boss
of Barclays after a direct intervention by the Bank of England, is
making a dramatic return to the City with the launch of a
new Africa banking business.

The financier is attempting to raise $250m
(£153m) by floating a fund on the London Stock Exchange within the next two
weeks – he plans to use the proceeds to buy a stake in an African bank with a
presence in several countries across the continent.

As part of the deal, Diamond is teaming up with
an African entrepreneur called Ashish Thakkar, the 32-year-old chief executive
of Mara Group, a conglomerate with "technology,

manufacturing, real estate
and agriculture" interests in 19 African countries. It is anticipated that
both men will sit on the new public company's board.

Just when you might have thought that this spiv
had taken a one-way ticket back to Hoboken or wherever and that we had seen the
back of him, up he pops, trying to float a new venture in the City, – an adventure which will not be without its
inconveniences – as even Diamond's friends admit his reputation is lower in
Britain than almost anywhere else in the world.

But there is nothing the regulators can do to
stop him.

You see, when the spineless bunch of flabby,
weasel-worded, financial regulators had dealings with Diamond last time, he was
under the cosh for some of the more emotive events of the financial crisis,
frequently being criticised about his pay and his aggressive attitude to
business – and this was even before the scandal over LIBOR, forced him out of
Barclays. In 2010 he was memorably dubbed the "unacceptable face of
banking" after it emerged that he had received cash and share awards that
could net him £63m.

His demise came in July last year, in the face
of increasing pressure from politicians and regulators following the
interest rate manipulation scandal. Marcus Agius, Barclays' then chairman, and
Sir Michael Rake, the bank's most senior non-executive director, were summoned
to see the then Bank of England governor Lord King, where they were told that
"Bob Diamond no longer enjoyed the support of his regulators".

I bet those words caused Diamond to lose sleep
at nights!

This is precisely the sort of regulatory
approach that the City has traditionally preferred to adopt, when things became
difficult.

The City fathers and those who regulate the
Square Mile know that trying to undertake meaningful and rigorous regulatory
intervention against the practitioners inside the City, would be a very
difficult, not to say, impossible task.

That is because the vast majority of them has
been engaged in some dirty dealings somewhere along the track, and would not be
able to stand in a witness box as a witness to truth if the historical
spotlight was suddenly beamed on them.

No, rather than engage in conduct which would
mean that they had to take decisions which would bar Mr Flashboy from doing
business in the City ever again, they demurred. They knew that by standing up
to him, and showing him the door, he would respond immediately with legal
action demanding Judicial Review, a costly, and very damaging process, from
which few of the grandees would emerge with any dignity, and more importantly,
it would shine a spotlight on the City of London and its dubious practices.

Better to get the Governor of the Bank of
England to trot out the old chestnut about 'losing the confidence of his
regulator'.

In one way and a couple of hundred years ago,
this might have been a clever way of making sure that 'The Diamond Geezer'
never did business again in the City,
because in those halcyon days, when the Square Mile was governed by the 'height
of the Governor of the Bank of England's eyebrows', to go against the dictat of
the Governor was sure and certain commercial immolation.

Once it was known that the individual concerned
had been named and shamed by the Establishment, no-one else would do business
with him for fear of being tarnished themselves.

The process was borrowed from
and carried out elsewhere in the Square Mile, Lloyds, The Stock Exchange, but
it was a way of making sure that a 'bounder' never came back to do business in
the market again.

But these are different times and different
days, and Bob Diamond isn't the kind of man to let a little historical tradition
get in his way. Why would he care about some arcane British concept such as the
confidence of his regulators? Barclays could invite him to leave, because at
the end of the day, the Governor of the Bank of England was their lead
regulator, but no doubt the exit cheque handed to Diamond had a good few zeros
on it to cushion the fall.

Diamond Bob is an Anglo-American, a man from
New York, and as his name suggests, he has a hard edge. He doesn't do
'tradition', he doesn't do 'Governor's eyebrows', he's either in the game or
he's out, and if you want to keep him out, you have to put a stake through his
heart in his coffin!

Whereas an Englishman faced with Diamond's
dilemma would have possibly taken a sabbatical, retired from commercial life
and gone into good works, charitable organisational support, become a friend of
Covent Garden, worn shabby tweeds and grown roses, Diamond took time out to
catch his breath, and then came back, harder and tougher than before.

You see, there is literally nothing to touch
him or stop him from setting up his stall all over again.

He hasn't been convicted of anything. Any
alleged crimes that were committed by the bank under his control of Barclays,
any market manipulation, any insider dealing, any money laundering, well they
have been allowed to quietly disappear! No prosecutions have been brought, no
investigations have been mounted. and nothing untoward recorded.

Even the regulatory investigations have only
resulted in fines being levied on the institution.

There have been no regulatory
adverse findings, no fitness and properness tests applied, no questions as to
his suitability to have control of a public company determined!

No, Bob Diamond walked away without any
recorded stain on his character. The man once dubbed In 2010 as "the
unacceptable face" of banking by the then business secretary Lord
Mandelson, citing Diamond's high level of pay (quoted as £63 million) and lack
of humility, was able to come back into the heart of the City Establishment and
start up a business which by any standards is going to carry a high degree of
risk!

So, if the British financial and political
establishment harboured any thoughts they were getting rid of Diamond by
pontificating about him 'among the chaps' and murmuring about 'lack of
confidence', well they were wrong, and now, the monster is back and running
amok!

Diamond is raising $250 million (£153
million) for Atlas Mara, a cash shell, which is aiming to buy a controlling
stake in an African financial services firm, and has already secured
significant institutional backing, according to the Financial Times. Diamond is
partnering with Ashish Thakkar, the founder of African conglomerate Mara Group,
to launch the venture.

After leaving Barclays last July, Diamond
set up New York-based merchant bank Atlas Merchant Capital and the financier is
understood to be keen to tap into the opportunities in Africa.

Both Atlas Merchant Capital and Mara, which has
a presence in 19 African countries across a number of sectors, will take
significant stakes in the shell company with the remainder of the cash coming
from institutional investors.

Diamond's choice of London to float his first
major banking venture since leaving the City may surprise many, even though it
is thought to reflect London's supposedly better ties with Africa, compared
with Wall Street. One London-based banking source said: "It reflects the
knowledge of Africa here, plus the time zone".

I say
'may surprise others', but it doesn't surprise me. You see, it also
reflects the fact that a lot of bankers and City wide-boys will pile in to do
business with Diamond all over again because he was known as a money magnet,
and that's all these parasites care about.

Diamond will come back on a roll, a lot of
spivs will queue up to invest money with him, and before you know it, there
will be another regulatory concern sticking up above the financial waterline.

And the City, the regulators and the financial
establishment have only themselves to blame.

What went on during the wild and wacky times at
Barclays Capital was a classic example of the unacceptable face of capitalism.
Barclays became a leitmotif for dodgy dealings and dirty deals. Just review
their list of fines and other punishments dished out for their criminogenic behaviour
during this era! A good friend of mine
who was a senior anti-money laundering compliance officer at Barcap, left
voluntarily because, as he put it to me, '...he wanted to sleep at nights and
not get arrested...'

The regulators have demonstrated a significant
degree of naiveté and a lack of basic moral fibre in the way they have dealt
with Bob Diamond.

They should have made him a target and lined
him up in their sights with the sole view of bringing him down, hard. They should
have called a Council of War, brought in the SFO, (although their present
record is pretty awful), and the Fraud Squad, and they should have seen what evidence they
could find to bring alleged criminal charges against him. For myself, I would
have thought that the Companies Acts might have been a fruitful hunting ground.

They needed to do this because they had to have
convictions or at least findings of 'not being fit and proper' if they wanted
to keep Diamond out of the market, and they failed in their duties.

Yet again, the regulators are proved to have
failed to face up to criminal wrong-doing in the Square Mile, and yet again
they will pay the price, in terms of an even more feeble reputation, but the
British public will pay the price in terms of more reputational damage to our
markets in the eyes of other countries, notably the Americans.

Diamond isn't doing this latest stunt because
he needs the money! He's doing it because running businesses like this is the
way he keeps the score.

His presence back in the London market proves
yet again what I have said consistently. The City and those who manage her
affairs dictate to the British Government the way things are going to be
played, and the Government, cravenly bows its acquiescence, while holding out
its begging bowl!

May I refer you to the website ."
http://uti.is/2013/12/why-are-bankers-investigated-in-iceland-and-not-so-much-elsewhere/
where you can read Sigrún
Davíðsdóttir's Icelog in which she poses the questions surrounding
the issue of prosecuting banksters. The following comment by a gentleman called
Tony Shearer encapsulates the issues very neatly.

"...Why
is it that Iceland has taken action
and the UK authorities have not? We know that in the UK the Serious Fraud
Office has a catastrophic record, but it seems clear that the political will
simply does not exist to make these prosecutions.

The UK banks and the 4 big
accounting firms have effectively corrupted the politicians, regulators, and
civil service. They have so placed their partners and former partners into the
system, and their level of lobbying, secondments, and work that they do for
these people is so great that they have undue influence. It seems to me that,
as a result, the Chancellor of the Exchequer and the UK Prime Minister as well
as the heads of the UK regulatory bodies and the civil servants regularly make
the wrong decisions.

We will continue to
have scandals involving the UK banks until such time as the senior politicians
and senior civil servants clear out from the system those people in the banks
and major accounting firms who have the wrong legal and moral attitudes.

The Chancellor, supported
by the Prime Minster, has hung a large sign over the City of London to say that
we are open to business for crooks and those with low morals. Iceland has hung
out a sign to say the opposite. By the actions of the Icelanders and the
inactions of the UK, the undesirables will avoid Iceland and chose London..."

8 comments:

Rowan, Thank you for your reference to my quote. I was CEO of Singer & Friedlander in 2005 when Kaupthing made an offer to buy the bank. I told to FSA that the Icelanders were not "fit and proper people" to run the bank; and so did the chairman of the bank, the chairman of the Audit Committee, the Finance Director (who went on to be FD of the Bank of England) and the Head of the Bank. But the FSA went ahead and approved them.After the Icelanders drove it into administration I gave evidence to the Treasury Select Committee. Hector Sants then disparaged my evidence, and he and Adair Turner gave evidence that wasn't true.So I do have quite a lot of background about all these events, and about how the City and the Regulators work.Tony Shearer

About Me

Having spent my career dealing with financial crime, both as a Met detective and as a legal consultant, I now spend my time working with financial institutions advising them on the best way to provide compliance with the plethora of conflicting regulations and laws designed to prevent and forestall money laundering - whatever that might be! This blog aims to provide a venue for discussion on these and aligned issues, because most of these subjects are so surrounded by disinformation and downright intellectual dishonesty, an alternative mouthpiece is predicated. Please share your views with what is published here from time to time!